What is Earned Income vs. Unearned Income?
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Earned
- Typically from an employer (i.e. salary)
- Can also be from your own business (self-employed)
- You generate income from some type of βworkβ you have done
- Annual bonuses
- Hourly wages
- Tips
- Commissions
- Some royalty payments
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Unearned
- Referred to as passive income
- Interest from checking/savings accounts
- Capital Gains and Dividends (from stocks)
- Retirement (e.g. 401K) and Pensions
- Inheritance or Gifts
- Lottery or Prizes
- Rental property income
- Disability payments
- Death benefits